The United States Commodity Futures Trading Commission (CFTC) is taking a major step to protect consumers from “pig butchering” scams in the cryptocurrency world.
Pig butchering scams typically start on social media, where fraudsters make contact and create fake romantic relationships to gain the victim’s trust. Once they have established a connection, they encourage the victim to invest in fake cryptocurrency schemes.
In a new effort, the CFTC has teamed up with several key financial and regulatory groups to raise awareness and help people avoid these deceptive schemes.
This new partnership with the American Bankers Association Foundation, along with federal regulators like the Securities and Exchange Commission (SEC) was revealed on 11 September.
Together, they launched an informative one-page infographic. This guide explains how pig butchering scams work and provides advice on what to do if you become a victim.
The CFTC pointed out that these scams can fool even those who consider themselves cautious.
“It targets individuals who think they would never fall for this type of scam by giving them an introspective on how these fraudsters have perfected their criminal craft to entice even the savviest investors”, a CFTC spokesperson said.
Broadening the outreach effort
To make sure the information reaches as many people as possible, the infographic will be shared by several important federal agencies.
This includes the SEC’s Office of Investor Education and Advocacy, the Financial Industry Regulatory Authority (FINRA), the Department of Homeland Security, the Secret Service, and other key organisations like the FBI and IRS.
The Director of the CFTC’s Office of Customer Outreach and Education (OCEO), Melanie Devoe, explained,
“Partnering with federal and state regulators as well as consumer protection groups and other organisations helps spread the CFTC’s customer education message and hopefully reaches people before they can get scammed.”
This initiative follows a significant event from July, where the CFTC and the Justice Department’s computer crime team held the first conference focused on fighting pig butchering scams.
This new infographic is part of a broader strategy to educate and protect consumers.
Rising concerns over crypto scams
The need for this awareness campaign is highlighted by recent data on cryptocurrency fraud.
On 9 September, the FBI reported that Americans lost $5.6 billion to crypto scams in 2023, which is a 45% increase compared to 2022. Among this total, over $215 million was lost to romance scams.
Additionally, the Federal Trade Commission has warned that crypto ATMs are increasingly being used by scammers. These scams involve fraudsters posing as customer service representatives, claiming there’s been an attempted identity theft or account breach.
Victims are then directed to deposit funds into crypto ATMs using a QR code linked to the scammer’s wallet. Last year, $110 million was lost through this method, with people over 60 being especially vulnerable.
In addition to the infographic, the CFTC is working with other agencies, including the SEC’s Office of Investor Education and Advocacy, FINRA, and the North American Securities Administrators Association, to develop a detailed investor alert.
This alert will explain how these scammers operate and why even experienced investors can be tricked. The CFTC advises that the best way to stay safe is to be cautious of unsolicited messages from unknown sources.
They also recommend reporting any suspicious communications using the reporting features available on most phones.
By collaborating with various regulators and financial groups, the CFTC hopes to provide clear and actionable information to help people recognise and avoid these scams before they become victims.
